US CPI & Retail Sales

The US dollar depends on the policy of the Federal Reserve, which, in turn, depends on inflation. This is why the market regards releases of American consumer inflation (Consumer Price Index, CPI) as very important. Currently the market is pricing in more than 90% chance of the Fed’s rate hike at June’s meeting. Analysts expect that the indicator has improved in April after having contracted in March. Strong CPI will strengthen the case for the rate increase and support USD. Weak data, on the contrary, will hurt the US currency.

Retail sales index is also an important gauge of consumer activity and has a great impact on the nation’s economic growth and, consequently, on the value of USD. The forecast for American retail sales is also good. If the actual figures come in line with the forecast, it will be positive for the greenback. Lower figures will make traders sell USD.